Budgeting For Results Committee - Sept. 14, 2009

[Guest sullinss]

School District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

September 14, 2009

 

Call to Order

 

The Budgeting For Results Committee of School District No. 2, Yellowstone County and High School District No. 2, Yellowstone County, Montana met at Lincoln Center, 415 North 30th Street, Billings, Montana, on Monday, September 14, 2009. Committee Chair Joel Guthals called the meeting to order at 5:20 p.m. and led those assembled in the Pledge of Allegiance. Budgeting For Results Committee members present were: Paige Darden, Deana Elder, Rod Gottula, Bruce MacIntyre, Joan Sleeth, Joel Guthals, Don Stanaway, Peter Gesuale, Sandie Mammenga, Kelly Donovan, and Barbara Bryan. . Members Peter Grass, Jane McCracken, and Ross Johnson were absent. Also present were CFO Thomas Harper, and District Clerk Leo Hudetz.

 

Communication From the Public

 

No one wished to address the Committee.

 

Consent Agenda

 

Bruce MacIntyre moved to recommend Board approval of the Consent Agenda items as follows:

1. Minutes of August 10, 2009

2. Addition of 6th Grade ECA Fund Account at Rose Park

3. Addition of Library ECA Fund Account at Rose Park

4. Addition of Chemistry ECA Fund Account at Senior

5. Addition of 6th Grade ECA Fund Account at Boulder

6. Addition of 6th Grade ECA Fund Account at Poly Drive

7. Addition of Staff Social Trust Fund Account at Ponderosa

8. Addition of Social Trust Fund Account at Big Sky

9. Addition of Special Pay Agreements Trust Fund Account at Lincoln

Don Stanaway seconded the motion. The motion carried unanimously.

 

Approval of Bus Routes FY2009-10

 

Thomas explained the statutory process whereby the Board of Trustees should approve the bus routes before submitting them to the County Transportation Committee for their approval. 82 bus routes, of 291 bus runs, are being submitted for approval this year. These are school-to-home and home-to-school bus runs over three miles reimbursed from a permissive levy. The District buses over 21% of the student enrollment which is about 2200 students. The District sets the routes and our contracted provider, First Student, provides the buses and drivers. These routes are those previously approved and incorporated in the First Student transportation contract.

 

Joel said in the future the bus routes, along with their cost, should be reviewed before or at the same time the contract is approved by the Board.

 

Paige understands the necessity to take a vote due to law, but is inclined to vote no because she is concerned about the process of how we make these decisions. The information given to study does not say how many children were served or identify routes that are for safety bussing vs. routes that are due to law requiring transportation of children three miles beyond their assigned school’s border. We don’t have historical information of whether these routes result in an increase or decrease in fuel consumption based on vehicle miles traveled, or whether they result in an increase or decrease in ridership, number of busses, number of subsidized vs. reimbursed riders, or most important whether it results in savings or additional costs for Billings’ taxpayers.

 

Paige believes we need to understand our transportation goals and if these routes help to achieve that. She wants to minimize bussing costs by redrawing boundaries with a priority on neighborhood schools to allow as many children as possible to walk or bike to school. She is concerned about the amount of bussing we do at Ponderosa, Newman, McKinley, Washington, Orchard and the far West End. There is a lot of sidewalk construction; therefore, can some hazardous routes be eliminated? Paige wants to avoid bussing out of the core of town to reduce costs. She is concerned that the District approves requests for some students from neighborhoods above the Rims to attend Boulder rather than bussing to Alkali Creek.

 

Since transportation is our third largest expense, it’s a fiscally important issue. She assumes our committee votes are seen by the Board as a recommendation and may assume we have carefully studied an issue prior to making a vote. Paige does not have enough information upon which to make a decision; therefore, she is inclined to vote no on this issue.

 

Barbara would like to see this Committee look at the bigger overall picture with less detail. She questioned if there were routes we were not being reimbursed for. She is concerned with the large number of special education routes.

 

Bruce stated the District is being reimbursed for all of these routes on the tax roles through a permissive levy. Rod said that since the contract was already signed it needs to go forward and correct our procedure for next year.

 

Thomas advised the Board will need to approve the bus routes this month before it goes to the County Commissioners for their approval at the end of September.

 

Kelly Donovan moved to recommend the Board approve Billings Public Schools 144 Special Education bus runs, 70 bus runs for K-6 elementary, 23 bus runs for middle school, 17 bus runs for high school/middle school, and 37 bus runs for high school FY2009-10. The motion failed due to lack of a second.

 

Chair Guthals said the Board will be informed that the motion did not come forward from this Committee; and, the Chair’s impression based upon comments from Committee members is that adequate information was not provided on this item to go further with this motion.

 

Thomas asked Committee members what information they are specifically requesting.

 

Kelly stated that the contention is not with the Transportation budget; it’s with the District’s boundaries. Until the District adjusts boundaries, the Transportation Committee has done their job and have met what’s been set by the District.

 

Bruce added that with a permissive levy you don’t do due diligence that one would do with a voted levy. The taxpayers have no decision in this at all. Peter Gesuale added that in the past trustees have transferred costs of educating students to the Transportation Fund. The District’s Transportation Director has established the best routes based on the parameters that have been given to her related to enrollment and special education numbers.

 

Rod said the bottom line for this Committee is to approve the dollars rather than the routes; we need to be better stewards of taxpayer dollars. The District needs to decide on our school educational model (what we want our schools to look like, i.e., neighborhood schools or cluster schools, etc.) and then match the best transportation routes to it.

 

The Chair suggested the Transportation Director could attend the Board meeting and explain the methodology used, the graphics of the routes, and a better understanding of the numbers of children transported on these routes.

 

Barbara said the Facilities Planning Committee is examining a lot of these issues and transportation needs to be included as part of the big picture. She would like to see this Committee make a recommendation that the Board take a strategic look at transportation and surrounding factors.

 

The Chair asked again what information the Committee would like Thomas to bring to the Board meeting to make a decision on this agenda item. Thomas advised if the item is not approved, the District will not get reimbursed. Barbara agreed the item should go forth to the Board, and changes to the process could be done next year.

 

Rod moved to recommend the Board approve the adequate but not exemplary bus routes which we currently have in place FY2009-10. Peter Gesuale seconded the motion.

 

Barbara Bryan moved to amend the motion to send this item forward to the Board with our approval with the request that the Board provide this Committee more planning information in the future to allow strategic analysis of the school bus routes for cost effectiveness and efficiency from the District and taxpayers’ point of view. Joan Sleeth seconded the amendment.

 

Voting for the amendment to the motion were Joel Guthals, Peter Gesuale, Sandie Mammenga, Rod Gottula, Don Stanaway, Bruce MacIntyre, Barbara Bryan, Deanne Elder, Paige Darden, and Joan Sleeth. Voting against the amendment to the motion was Kelly Donovan. The amendment to the motion carried.

 

Kelly said the whole thing is out of sequence. It’s good to gather information, but voting on it on the transportation item doesn’t solve the problem. A lot of larger factors are involved with City Planning and new subdivisions, population distributions, and special education requirements. The Chair will forward Committee comments to the Board.

 

Chair Guthals called for the motion on the amended motion. Voting for the amended motion were Joel Guthals, Peter Gesuale, Sandie Mammenga, Rod Gottula, Don Stanaway, Bruce MacIntyre, Barbara Bryan, Deanne Elder, Kelly Donovan, and Joan Sleeth. Voting against the amended motion was Paige Darden. The amended motion carried.

 

403(b) Committee Charter

 

District Clerk Leo Hudetz reported on the 403(b) Committee Charter. The 403(b) is like a 401k for schools. There is no District contribution.

 

In July of 2007 the Internal Revenue Service issued comprehensive new guidelines covering 403(b) Deferred Compensation plans. Billings Public Schools established a 403(b) ad hoc committee in December 2007 to implement these new guidelines and recommend vendors that will participate in the District’s 403(b) plan. As a result of the committee’s work a plan document was created and approved by the BFR and Board of Trustees, and five vendors were selected and approved by the BFR and Board of Trustees.

 

Since the ad hoc committee completed its work, it has been disbanded in accordance with the Board of Trustees directive. However, an ongoing 403(b) committee should be established to monitor the plan and report to the BFR and Board of Trustees and make recommendations as necessary.

 

Leo modeled the charter after the Insurance Committee Charter. It was reviewed by Attorney Jeff Weldon and Thomas Harper. Copies were sent to the bargaining units and no feedback has been received from them. The Budgeting For Results Committee is being asked to review the resolution and committee charter establishing this committee, and recommend to the Board of Trustees that these documents be approved.

 

Bruce MacIntyre moved to recommend the Board approve the resolution and committee charter as presented in the agenda. Kelly Donovan seconded the motion. The motion carried unanimously.

 

Bills Paid – August, 2009

 

Peter Gesuale moved to recommend Board approval of the bills paid for August, 2009. Bruce MacIntyre seconded the motion. The motion carried unanimously.

 

Financial Reports – August, 2009 (unaudited)

 

Committee members reviewed the Financial Reports for August, 2009. Thomas reviewed the budgeted and cash funds and explained we are 16% into the year and have spent about 5% of the budgeted General Funds. 35-40% of the budget is spent in the last month of the year because of the lag in teacher payrolls. Discussion was held on reducing the amount of detailed information and focusing budgeting on the bigger picture. It was agreed to present the Financials to this Committee on a quarterly basis for the first three quarters and monthly reports for the last three months. The Board will continue to receive the Financials every month.

 

Health Insurance Report

 

Thomas explained that as of June 30, 2009 we had a good year overall; but, we used $770,545 of the reserves. The paid loss ratio for medical and prescriptions for Active is 97.2%, Early Retirees is 189.7%, and combined is 105.8%. This means the actives subsidized the plan to some extent, and the early retirees were a factor in the health insurance premium increase of 12%. The District pays the premium for active employees’ single coverage. State law guarantees an employee eligible for retirement benefits who retire from active service, their surviving spouse and surviving children to remain members of the group until the member becomes eligible for Medicare. Early retirees pay full premiums until they reach Medicare age. The individual claim stoploss is set at $160k. The number of large claims has increased over the prior year.

 

An article relating how Safeway is cutting health-care costs by rewarding healthy behavior was presented for information. District benefits are bargained, but dialogue on how to realize savings through wellness programs can be beneficial. Thomas said health care premiums increased 12% this year, and we are projecting an additional 12% increase in premiums FY11 and FY12.

 

Don suggests our health insurance administrator, EBMS, prepare and present a proposal for a three-year strategic health care plan for SD#2 to this Committee to help control health care costs; and, have the Chair appoint by September 21st a sub-committee to meet with them to prepare a proposal and accept volunteers to serve on that committee. Don said the BFR Committee is charged with reviewing costs and should be pro-active in attempting to control those costs, which would be separate from the charge of the Insurance Committee. Thomas agreed we need to contain the growth of health care costs, perhaps by targeting certain areas that improve lifestyles and by interrogating claims.

 

Peter pointed out that employee contribution as a percent of the Net Plan Cost is decreasing each year and is currently 19.5%. He said that is unsustainable to the District and is a trend the public will not support. Peter would like the District to address health care costs through the assistance of the BFR Committee.

 

Chair Guthals stated next month we will have an action item on the agenda to appoint a subcommittee as recommended to formulate a three-year strategic health plan for SD#2 to help control health care costs, including wellness programs and other recommendations.

 

The Chair requested that a letter received from a community member regarding insurance costs be put on next month’s agenda along with Thomas’ reply.

 

Budgeting For Results

 

The charge and responsibilities of this Committee are as established in Procedure 1130-P1 as follows:

 

“The Budgeting For Results Committee is charged with reviewing and evaluating the business and financial operations, facilities operation and maintenance, educational outcome measures, quality assurance (accreditation review), grant review and evaluation, and financial policies of the District. It scrutinizes the District budget, and makes recommendation to the Board in light of desired educational results, major expenditures, potential economies for the District, sources of funding, personnel policy, and general fiscal management policy. The Budgeting For Results Committee also oversees and reviews the health insurance program.”

 

Chair Guthals said the Committee has a very broad charge of responsibilities. Certain tasks must flow through this Committee to the Board for approval. Joel would like to see this Committee focus more on strategic big ticket items so we can analyze, determine, and recommend changes that result in a balanced budget in future years as the District faces challenging financial problems.

 

Thomas reviewed the forecasted General Fund budgets as follows:

 

 

 

Revenue assumptions used were:

• FY10 & FY11 – one-time money allows a 3% increase in basic entitlement and ANB.

• FY12+ - 3% increase in basic entitlement & ANB after adjustment to a base rate.

• No increase in General Fund mill levy

• ANB changes:

o K-6 continues to show positive growth

o Grades 7-8 are flat

o High School continues to decline

 

Expenditure assumptions used were:

• Salary Increases: FY10 is $3.75%, FY11 is 3.60%, FY12 is 2.00%

• Workers’ Compensation: FY10 is 8%, FY11 & FY12 is 4%

• Retirement: Elementary is $200K and High School is $100K

• Health Insurance: increases 12%

• Liability Insurance: increases 10%

• Utilities: no increase

 

The total District General Fund fund balance (revenue less expense) forecast is:

• 117,943 FY2010

• (2,987,802) FY2011 (one-time funding ends)

• (6,892,313) FY2012

 

Operations & Maintenance:

• Deferred Maintenance is continued – est. $121M

• Facility Operating Expenses:

o Avg. Cost for Elem. & Middle Schools - $111,789

o Avg. Cost for High Schools - $420,976

 

Personnel Costs & Class Sizes:

• 91% of Elementary & Middle School Expenses

• 84% of High School Expenses

BPS class size, staffing patterns, and personnel costs are similar to other Montana AA School Districts.

Other AA Districts have additional resources with building reserves, technology funds, and more flexibility to deal with shortfalls.

 

Thomas discussed the timeline for resolution of our budget shortfalls. He said the revenue forecast will be updated with the fall enrollment count taking place on October 5th. Options and decisions for resolving budget shortfalls need to be discussed within the next 2-3 months.

 

Chair Guthals said we have another committee that is looking at facility plans. He doubts they are looking at doing a bond issue soon. We are going to have to figure out how to balance the operational budget of the District. The Chair requested a mill levy discussion be put on the October BFR agenda.

 

Paige would like to focus on passing a mill levy, budget for professional help, and discontinue any public discussion of building a new school.

 

Adjournment

 

There being no further business, the meeting was adjourned at 8:03 p.m.

 

 

 

 

 

Joel Guthals, Chair

 

 

Sherrill Sullins, Recorder